446 B.R. 447
D. Or.2011Background
- Boyce, a GEICO claims adjuster, had a $57,000 base salary plus discretionary profit sharing and a company vehicle.
- He funded his residence partly with a $16,010 401(k) loan and owed $34,000 student loans and two $8,000 credit card debts after his divorce.
- Roommate rental income existed but was underreported; approximately $34,000 in student loan debt was not disclosed.
- He incurred additional credit card debt and purchased a Ford F350, later surrendered, and borrowed from 401(k) to acquire a Dodge Ram and a camper.
- Boyce filed for bankruptcy on October 28, 2008; profits and income were later found to be understated in schedules.
- The bankruptcy court dismissed under 11 U.S.C. § 707(b) on bad faith grounds and under the totality of circumstances.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether profit sharing must be included for bad faith. | Boyce | Miller | Profit sharing properly included; bad faith supported |
| Whether filing was in bad faith under § 707(b)(3)(A). | Boyce | Miller | Court did not err in bad faith finding |
| Whether totality of circumstances supports dismissal under § 707(b)(3)(B). | Boyce | Miller | Totality supported dismissal |
| Whether Chapter 13 relief would benefit creditors. | Boyce | Miller | Not beneficial; dismissal affirmed |
Key Cases Cited
- In re Hageney, 422 B.R. 254 (Bankr. E.D. Wash. 2009) (bad faith involves inappropriate purposes and conduct at filing)
- In re Mitchell, 357 B.R. 142 (Bankr. C.D. Cal. 2006) (balance of factors for bad faith under § 707(b)(3)(A))
- Hamilton v. Lanning, 130 S. Ct. 2464 (2010) (means-test concepts not controlling for § 707(b)(3))
- In re Price, 353 F.3d 1135 (9th Cir. 2004) (abuse standard under § 707(b) involves ability to pay)
- In re Stubblefield, 430 B.R. 639 (Bankr. D. Or. 2010) (ability to pay can justify dismissal under § 707(b))
- In re Cribbs, 387 B.R. 324 (Bankr. S.D. Ga. 2008) (disposable income as a factor; not sole basis)
- In re Hilmes, 438 B.R. 897 (N.D. Tex. 2010) (401(k) loan repayment considerations may affect creditors)